Photon Group (PGA)

The market appears reluctant to re-rate embattled communications and advertising group Photon even as it successfully recapitalised through a more than $100 million capital raising. The stock fell to a record low of 9¢ on Wednesday, which puts it on a one-year forward price-earnings of a little over one. Such valuation is normally reserved for companies that are on the verge of collapsing, but
Photon
has probably passed that danger point – at least for now. It doesn’t help that retail shareholders took up less than 70 per cent of their entitlement, leaving a share shortfall of more than 2 million that went to professional and sophisticated investors. At least now management can focus on running the business and if it can show some early success in turning around its fortunes, it will more than likely win renewed support considering corporate interest in the sector and consensus expectations of a strong rebound in earnings from 2010-11 onwards.